Karin Kloosterman
Forecasting technologies and design to better the planet

Liberalizing Online Gaming in Israel – Is it Wishful Thinking?

Israel has one of the most shrouded and confusing laws in the world. On the one hand, it allows both sports betting and lotteries; while on the other hand, it prohibits online gaming – although the law only targets the operators as opposed to the players. This is quite ironic, considering the country is known to have a strong connection with the online casino industry.

Israel’s gambling laws may seem fractured and confusing, but online gambling laws are far much worse. Although the law is clear about the legality of online casinos and the punitive measures that are in place for any person who doesn’t comply, it still isn’t clear when it comes to Israelis participating in games on casinos whose servers are situated in other countries.

As many would love to put it, the topic of gambling and its legality in Israel is more of a gray area. As per the country’s law book, the section that deals with gambling – or the ban on gambling to be more specific – falls under the Israeli Penal Law 5737 of (1977), is utterly vague on matters online gambling. Despite the lack of stable laws regarding online gaming, the Israeli Attorney General, in 2005, issued orders that called for the closure of online gaming operators whose servers were based in the country. The rules also included penalties for any credit companies that facilitated the transactions for such online gaming site operators.

Today, the situation is still unclear and confusing. In fact, lawyers term Israeli Penal Law, 5737-1977 (Penal Law) as seriously cracking down on casino gaming with severe repercussions for anyone who dares to oppose the law, while, on the other hand, permitting lottery and sports betting as being legal.

The law bars the organizing of betting, lotteries, and games of chance, along with operating venues where these activities happen. But there are two exceptions to this ban:

In 1951, the law was amended to permit for the development of a national lottery (Mifal Hapayis) that provides scratch cards, various raffles and lotteries, and a weekly subscription lottery. The Mifal Hapayis is also permitted to run a limited number of land-based Video Lottery Terminals (VLT) in different locations throughout the country. The Ministry of Finance oversees the operations of the lottery.

In 1967, the Israel Sports Betting Board obtained full rights to create and supervise to bet on basketball and soccer games only. The board’s power to perform betting activities has widened to cover additional local and foreign operations and also wager on Irish and UK horseracing events.

So, technically speaking, land-based casinos in Israel are much like unicorns – but of course, going by the law of demand and supply, there seems to be plenty of gambling casinos and sites operating secretly. The prohibition has given rise to numerous undercover gaming activities running behind closed doors. Unfortunately, these unregulated casinos are not just superficial, but also dangerous. Lately, the prohibition of gaming activities in Israel has been facing intense criticism for such reasons. Many believe that the legalization of casino games and gambling will give rise to regulated, safe, and fair casinos and also contribute to the country’s economy. This is precisely why Britain lifted the ban on gambling and gambling games.

The British lawmakers realized that the ban did not stop gambling in the first place, and if anything, it only encouraged underground gambling. They also noticed that Britain was losing out millions of pounds of potential revenue from the gambling industry. According to the lawmakers, it was in the country’s best interest to legalize gambling – and so they did. As of January 2010, the revenue collected from Britain’s gambling market was about £6 billion.

If this figure doesn’t give the Israeli legislators a nudge to legalize gambling and monitor it up close, then one would expect that the fact that the UK gambling market employs about 100,000 people and makes more than £700 million in tax revenue would make them think twice, but that’s not the case. Although Israel adopted Britain’s legal framework, even the ban on gambling, its laws don’t seem to be as flexible and dynamic as Britain’s laws when it comes to gaming.

Whether Israel will follow on the footsteps of countries like Britain is still a question in the minds of many gaming enthusiasts. As of now, it seems as though they are in no hurry to make any changes, despite the confusion.

About the Author
Karin Kloosterman was born an activist, focusing that spirit to align human desires with Earth-friendly approaches. She's a published scientist, award-winning journalist and a serial entrepreneur who founded flux to cognify Earth's data. She loves thinking about Israeli fringe businesses like cannabis and the gaming industry and how they pave the way for new technologies to be born. She knows that tech from Israel can accelerate impact companies has has started her own company and its first product Eddy (www.growwitheddy.com) to home growers in the United States, and in the not-so-distant-future to Earth's first colony on Mars.  She is the founder of the world-leading Middle East eco news site Green Prophet www.greenprophet.com Karin connects investors to cannabis research in Israel. Reach out via karin@greenprophet.com
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